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Allstate must pay for diminished value of cars in Georgia

Allstate Insurance Co. has agreed to settle a class action lawsuit that will pay as many as 274,000 Georgia policyholders a total of $59 million for the diminished value of their cars repaired after crashes since January 1997.

Georgia Insurance Commissioner John Oxendine has issued a directive saying all auto insurers licensed to do business in Georgia must abide by the court's ruling.

Allstate's decision was prompted by a recent Georgia Supreme Court ruling in a similar case against State Farm Mutual Automobile Insurance Co. The judge in that case upheld two State Farm customers' assertions that wrecked cars are worth less simply because they have been wrecked — no matter how expertly they're repaired — and that insurers are liable to pay the difference. Last month State Farm agreed to pay $250 million to reimburse 700,000 Georgia policyholders who had filed collision claims with the insurer since December 1993.

According to Allstate officials, "the Georgia decision is contrary to recent rulings by a number of other state courts in favor of the insurance industry and Allstate involving diminished value." But Allstate officials say it makes sense to settle the lawsuit rather than continue with costly litigation

Georgia Insurance Commissioner John Oxendine has issued a directive saying all auto insurers licensed to do business in Georgia must abide by the court's ruling requiring State Farm to pay its auto policyholders for the diminished value of their wrecked cars or face fines or expulsion from the state.

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